Inside the Varoufakis secret working group

They traded information over encrypted email, kept the circle tight and met far away from Greek government buildings.

The secret working group convened by former Greek Finance Minister Yanis Varoufakis to prepare for an exit from the euro knew its mission was sensitive, one member told POLITICO Tuesday, but it wasn’t a rogue operation.

“There was nothing remotely questionable about what we were doing, except we were aware that it could be misconstrued,” said American economist James Galbraith, who coordinated the group for Varoufakis, in a telephone interview from Washington.

The cloak-and-dagger enterprise was revealed over the weekend when the Greek newspaper Kathimerini reported that Varoufakis and former Energy Minister Panagiotis Lafazanis had discussed a plan that involved raiding the central bank’s reserves and hacking into taxpayer accounts in order to return to the currency the country used before the euro.

The group’s mandate: To try to fashion answers to a set of vexing questions, which according to Galbraith included: “Where should the attention of the government be faced if it’s forced over this cliff? Matters like, what’s the inventory of fuel? Whats the food situation? How long are medical supplies going to last? These kinds of things, which of course we couldn’t find out because if you start asking you end up alerting people that there are plans going on. But people have to be primed to ask those questions.”

The nature of the discussions required secrecy. “The main thing was that nobody was loose in what they said to anybody,” Galbraith said. He said the group consisted of “four or five members,” though only Galbraith and Varoufakis have been identified.

Asked if the secret group used code words, Galbraith laughed.

Galbraith’s work was unpaid, he said in a statement posted Monday on Varoufakis’ blog. He wrote he was working “based on my friendship with Yanis Varoufakis and on my respect for the cause of the Greek people.” The American economist and his wife have spent holidays together with Varoufakis and his wife Danae Stratou on the island of Aegina.

Varoufakis and Galbraith became close friends after the Greek economist accepted a two-year contract to join the University of Texas-Austin’s faculty as a visiting professor in 2013. Galbraith is also acquainted with Greek Prime Minister Alexis Tsipras, who visited Austin with his wife during Varoufakis’s appointment.

But the secret working group was under the leadership of Varofuakis, Galbraith said in the interview.

“I had no direct contact with Alexis after the end of February,” Galbraith said. “We were working under Yanis, and that was the end of it as far as we were concerned. We were not trying (to be) and we were not involved in any way in policy discussions in Greece. It was simply a question of background preparation in case the country was forced into a position it didn’t want to be in.”

Galbraith said that the secret working group was not involved with plans to tap into the Greek tax authority’s tax system.

“This was separate from this other matter that has caused a lot of hullabaloo, which is the use of tax numbers to establish a payment system,” Galbraith said.

Speaking to a group of pension, sovereign wealth and other investors on July 16, Varoufakis mentioned the possibility of hacking into the country’s tax system to create infrastructure for a new payment system.

“This would have created a parallel banking system, which would have given us some breathing space, while the banks would have been shut due to the ECB’s aggressive policy,” Varoufakis was quoted as saying. With the parallel system, payment denominations could be switched from euros to drachma at the government’s discretion.

The exact contents of the call, which was governed by Chatham House rules should have been private, but a record of the call was leaked to Kathimerini.

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Mackensen

Well, rightly in the phone conversation made public now the start questions is “why didn’t you have a plan B?”. It is indeed good governance to have in such a situation a plan B and it is understandable that it had to happen somehow secretly. It is very hounorable by J. Galbraith to contribute to this task and the memorandum of end May would make very interesting reading, also by theoretical matters. Unfortunately, most likely it never will be published.
But one real question remains: the reaction of Varoufakis to the starting question. He simply could have pointed to the group and explaining that everything was ready. But no, he must tell a story very well fitting into a Carré-novel. Did he intend to look like Yanis 007? Or does he intend to disrupt the discussions just starting now and than to come up as the successor of a failed Tsipras?

Posted on 7/28/15 | 5:26 PM CET

Dan Allen

Zeke Turner got so much wrong in this story. Specifically: “The cloak-and-dagger enterprise was revealed over the weekend when the Greek newspaper Kathimerini reported that Varoufakis and former Energy Minister Panagiotis Lafazanis had discussed a plan that involved raiding the central bank’s reserves and hacking into taxpayer accounts in order to return to the currency the country used before the euro.”

One, Varoufakis and Lafazanis never discussed any such plan. Two, the Lafazanis plan to nationalize the National Bank of Greece was his own plan, as Minister of the Economy, and it had nothing to do with Varoufakis, nor was it ever discussed with him. Three, they did not try to copy the Tax IDs in order to return to the drachma. They wouldn’t have needed to do that to return to the drachma. They needed to do that to create a parallel system of payments in the event of a bank shutdown, effectively IOUs like California used 5 years ago. California, to my best recollection, is still using the US dollar as currency.

Posted on 7/28/15 | 6:29 PM CET

hari naidu

If malfeasance can be justified it’s possible the individuals involved if Janis.007 or whatnot will be ultimately prosecuted – even in Greece! – because the implicit conspiracy theory of confiscating GCB and it’s sovereign code (statutory body) must under circumstances be defined as *criminal* enterprise, and therefore subject to criminal charges and more.

Posted on 7/28/15 | 10:03 PM CET

Stevemid

Here is Yanis’ own statement on the matter. Of course they’d need a plan be if Germany succeeded in ejecting Greece from the EU. yanisvaroufakis.eu/author/yanisv/